Beach Energy has entered into an equity deal over two prospects at the Ironbark offshore gas project in the Carnarvon Basin, Western Australia.

The company is purchasing a 21 per cent equity interest in the WA-359-P exploration permit from Cue Exploration for $900,000 plus four per cent drilling costs, on the condition that oil giant BP acquires 42.5 per cent equity in the site by December 11. Once the deal is exercised, WA-359-P ownership will be split 42.5 per cent to BP, 36.5 per cent to Cue and 21 per cent to Beach.

Beach also has a 7.5 per cent equity call option for neighbouring site, WA-409-P to the tune of 7.5 per cent drilling costs plus 10 per cent revenue on royalties. If Beach agrees to the option, WA-409-P ownership will be split 80 per cent to BP, 12.5 per cent to Cue and 7.5 per cent to Beach.

Matt Kay, chief executive of Beach, said the Ironbark represented a high impact exploration prospect and that he was excited to collaborate with BP and Cue.

“With favourable Western Australia LNG market dynamics over the coming decade, successful development of Ironbark may align with expected shortfalls in LNG feedstock,” he said.

“This transaction is another example of progress against Beach’s growth strategy, and provides an attractive risk and reward profile to support ongoing shareholder value creation.”